Assessing the 2011 Defense Cuts

How much defense-budget cutting is too much?

Some things just seem to come in cycles. Before 2008, some economists speculated that perhaps we’d found a way to soften the magnitude and pain of recessions—and then we got the great recession. Similarly, some anticipated that defense spending would plateau around 2010 or 2012. Sure, war costs would eventually decline, and while the gravy train might not last forever, there would be no precipitous decline for the base or “peacetime” budget this time—in contrast to what happened after World War II, Vietnam and the Reagan buildup.

Wrong again. The U.S. defense budget, or 050 account in the federal budget, peaked at $739 billion in 2011. That included $160 billion in war costs, about two-thirds for Afghanistan and one-third for Iraq. With Iraq ending early in fiscal year 2012 and Afghanistan gradually scaling back, the 2012 projection was $120 billion in war costs. Accordingly, the Obama administration’s intent last February was to request about $700 billion for 2012—showing restraint in the core budget, which would remain almost flat (not quite matching inflation) and reaping $40 billion in war savings. But after the budget drama of the spring, summer and fall, the 2012 figure will now be $662 billion.

With the August cuts implied by the Budget Control Act, subsequent budgets will not keep up with inflation. As war costs decline further, total defense budgets could fall to the $600 billion range by mid-decade. And with sequestration in the offing, that number could be less than $600 billion in 2013 and $550 billion or less by 2015.

This is all still a huge amount of money, of course. But how much cutting is too much? All the numbers are big, but some may be adequate for a sound national-security strategy, while others may not.

Some argue that the United States is in decline, and that we should get used to the idea, scaling back our international obligations and defense budgets accordingly. The declinists are correct in some narrow ways: as a percentage of global economic output, American GDP is less than before and will remain that way. But economic output is a narrow and ultimately incorrect way to assess the country’s overall international position. On balance, declinists are more wrong than right. Or perhaps the better way to look at it is that they may still be proven wrong: in the past, Americans responded to the crises and challenges of the day with appropriate action. When part of comprehensive deficit reduction, defense reductions can be an important part of restoring the nation’s economic fundamentals, ensuring a robust foreign and national-security policy in the decades to come.

The United States has achieved many if not most of its post-World War II aims. The world we see today is a reflection of its foreign-policy successes, not its failures. Most of the world’s wealth and strength is found among America’s allies or friendly neutrals. The international system works well for most major countries, and even would-be challengers like China or Russia are unlikely to see much benefit in challenging it fundamentally. By embracing its successes—and the diffusion of global power that they have helped produce—the United States can probably do what no global superpower has ever done before: remain strong even as power disperses somewhat. Its responses must be proportionate to the challenges ahead and neither inadequate nor excessive.

There is significant risk of doing this wrong, so we should not favor military cuts for their own sake. Cuts make sense only as part of a broader national effort of deficit reduction and economic renewal. There is no sound national-security logic to enacting defense cuts if entitlement policy, tax policy and other federal programs remain unchecked while the Pentagon is offered up as a sacrificial lamb in an unbalanced deficit-reduction effort. Done as part of a general national agenda of shared sacrifice, however, defense cuts of the requisite magnitude may be feasible without requiring strategic retrenchment.

Saving 8 to 10 percent in the annual peacetime defense budget of the United States—arguably the Pentagon’s fair share of a serious deficit-reduction effort—would be hard but not impossible under a shared-sacrifice philosophy. Over ten years, that would translate into $400 billion to $500 billion, to use the decennial accounting popular since the August 2011 debt deal between President Obama and Congress. These cuts would go beyond those already expected as part of a gradual reduction in the nation’s costs for waging war abroad.

It would be a mistake to place the full burden of around $50 billion in additional annual savings, beyond those already identified by Secretary Gates, within any one area of the defense establishment. The future risks facing the United States, and thus the future missions of the American military, are too disparate and hard to predict. We might adopt a one-war framework for sizing ground forces (with additional capacity for smaller missions), reduce the navy fleet from 285 ships to about 250, find a cheaper way to maintain 1,550 strategic nuclear warheads (the New START treaty’s limit) with fewer Trident subs and ICBMs, and implement more judicious weapons modernization plans.